|
The SET closed at 1,414.54 on Friday, up 1.41% for the week, ahead of the release of the U.S. nonfarm payrolls report. The U.S. Federal Reserve received much needed good economic data, to support their views for a December rate hike, at 8:30 AM EST on Friday when the U.S. Labor Department released the nonfarm payrolls report for October showing 271,000 jobs were added to the economy, while the U-3 headline unemployment rate dipped to 5.0%, from 5.1% in September. Wall Street economists were way off with their forecasts, as the consensus expectations were only for a 180,000 jobs gain with the unemployment rate remaining at 5.1%.
The August and September figures were revised by a combined 12,000 more than previously reported. The U-6 rate, that includes all the jobless plus people marginally attached to the workforce and those employed part-time because of a weak economy, fell 0.2 percentage points to 9.8%. The labor force participation rate in October remained at a 38-year low of 62.4%, meaning about 94.5 million Americans, 16 years and older, did not have a job and were not actively trying to find one.
The federal funds futures, traded on the Chicago Mercantile Exchange and commonly used to estimate the market’s views on the likelihood of changes in U.S. monetary policy, indicate 69.8% odds for a half-point rate hike at the Fed's December FOMC meeting, according to data from the CME Group as of November 6. The Federal Reserve seems determined to hike the rate this year but they admit in the policy statement, issued after the FOMC meeting on October 28, that the pace of job gains has slowed. Federal Reserve Chair Janet Yellen affirmed the Fed's somewhat hawkish stance on Wednesday, when she told the U.S. Congress that a rate hike in December was a "live" possibility, but not a certainty.
Earlier this week, the Bank of Thailand (BOT) decided to key keep rates on hold at 1.5%, after its Monetary Policy Committee Meeting. BOT Governor Veerathai Santiprabhob said last month that monetary policy will play a supportive role, but government spending and investment will drive the recovery and the economy should start to see the full benefit of state stimulus next year. The BOT said it will include its assessment of stimulus spending when it announces revised economic forecasts at the next rate meeting in December.
In its October policy statement, the BOT affirmed its stance as sufficiently accommodative, especially if the THB generally remains weak. Since the last BOT meeting on October 2, the Thai baht has appreciated over 2.66% against the U.S. dollar, to close at 35.529 baht per dollar on Wednesday. For the week, the USD/THB exchange rate inched up 0.65% to close at 35.83 baht per dollar. Most of the week's gain came from the Friday 0.77% increase, after the release of the U.S. nonfarm payrolls report.
The Thailand 10-Year Government bond was yielding at 2.64% on Friday, down 1.49% for the week. The spread between the Thailand 10-Year Government bond yield and the U.S. 10-Year Treasury note yield, yielding at 2.325%, has narrowed to 0.315 percentage points. This could likely trigger capital outflows and another wave of foreigner selling on the SET.
Since the beginning of November, individual investors of the SET have been selling into the rally again. According to SET market data, net sells of individuals are topping 10.64 billion baht while foreign investors, proprietary traders and institutional investors have been buying with combined net buys of 10.64 billion baht. During the same period, the SET has been up 1.41%.
From our short-term technical viewpoint, the SET has been moving in an ascending (ASC) wedge chart pattern since the end of August but unable to break out the 100-day SMA (blue line) head resistance. Note that the 100-day SMA is running in parallel to the trendline resistance of the symmetrical triangle (SYM TRI). One should pay attention that the bullish higher low (H-L) chart pattern, meaning every low is higher than the previous low while every high is higher than the previous high, is still intact as long as the SET doesn’t close below 1,387.75. The Thai baht is on the move again, so watch out! |
